Facebook’s Q4 and full year earnings report were released this week, doling out information on revenue, usage, and advertising on the platform. Numbers don’t lie, and Facebook’s Q4 numbers tell a story of continued growth and an evolution focused on mobile.
Revenue projections for Facebook’s Q4 were massive in a way befitting the largest social network in the world. Analysts projected that Facebook would close its fourth quarter with $1.31 in EPS and $8.51 billion in revenue. If Facebook had met those expectations, it would’ve been a considerable jump from its final Q4 2015 numbers, which put EPS at $0.79 and revenue at $5.84 billion.
Facebook didn’t just meet expectations, though—it shattered them. Facebook’s Q4 2016 saw EPS (earnings per share) jump to $1.41, eclipsing projections by a full $0.10, and revenue totaled $8.81 billion. It was a stellar fourth quarter for Facebook and the numbers are proof.
That said, revenue only tells half the story.
A major component of the earnings report is mobile. Revenue from mobile ads made up 84% of total ad revenue for the quarter. It’s a huge number, but maybe not quite as surprising as Facebook’s major “exceeds expectations” mark in revenue. Mobile’s long been the cash cow for Facebook. In Q4 2015, mobile ads made up 80% of total ad revenue. So while Q4 2016 is certainly an increase over 2015 numbers, it’s not terribly shocking.
Facebook’s shown pretty reliable growth in ad revenue year-over-year, but it’s far from a guarantee going forward. Ad revenue in Q4 2016 closed with a 53% increase over the same period in 2015, but the company has already said that it expects that the growth rate for ad revenue will fall in 2017.
Another key element of Facebook’s Q4 earnings report is the usage numbers. Facebook reported that for the month of December 2016, it saw 1.23 billion daily users and 1.15 billion mobile daily users—an increase of 18% and 23% YoY respectively. As is the case on most platforms, mobile’s seeing major growth on Facebook.
It stands to reason. Mobile’s getting bigger everywhere. Photos, videos, and articles are increasingly optimized for mobile as we spend more and more time on the smallest screen we own (save for those still rocking beepers). Facebook’s news feed and ads are built for mobile, and livestreaming, 360-degree photo and video, and publishing tools are pushing the experience further and further away from desktop and into users’ hands.
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It doesn’t make an appearance as a line item on the fourth quarter earnings report, it’s worth noting that video is an increasingly vital part of Facebook’s growth. Though initial viewing statistics and metrics for Facebook video ads were faulty and a tad inflated (“a tad” being somewhere in the realm of 60-80% too high), video remains an integral piece of the Facebook puzzle.
During Facebook’s Q4 earnings call at this time last year, CEO Mark Zuckerberg said that Facebook users watched a total of 100 million hours of video on Facebook every day. And with the addition of some new features, Facebook video isn’t limited to traditional uploads. The introduction of Facebook Live has ushered in something of a new era of video on Facebook.
Allowing publishers, celebrities, and organizations to broadcast live video feeds and interact with viewers in real-time. Facebook Live isn’t just an opportunity for a new approach to co—ntent either — it’s an opportunity for better engagement on Facebook. At the risk of stating the obvious, Facebook Live is about what’s happening now, meaning that users are much more engaged in what’s unfolding in the moment. Early last year, Facebook said that, on average, users spend 3x as long viewing a Facebook Live video than a video that isn’t live.
Another tool that’s going to have a major impact on Facebook’s business and engagement in the News Feed going forward is the introduction of Facebook 360. Originally released in mid-2016, Facebook 360 gives users the tools to upload 360-degree photos and videos to Facebook. It’s no secret that Facebook (which owns Oculus) is invested in the future of virtual reality both inside and outside of VR headsets. Virtual reality is more than frame rates and fancy camera rigs, and Facebook 360 is a going to play a pivotal role in democratizing VR from both a creation and consumption perspective.
By giving users, publishers, influencers, celebrities, brands, and organizations the tools to publish VR content in the form of 360-degree photos and videos, Facebook is helping to solve one of the biggest problems facing VR right now: Eliminating the dearth of quality VR content. Though we’ve been talking about the emerging possibilities of VR for years, its still in its infancy. Facebook 360 is the perfect introduction to casual consumer VR because it doesn’t cost anything and occurs naturally within a content ecosystem with which users are already intimately familiar.
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As we move forward in 2017, we may see Facebook’s prediction of falling ad revenue come to fruition, but Facebook’s poised for some profound growth in video, livestreaming, and 360-degree content. There are going to be new opportunities for engagement and advertising that arise as users and brands push the mediums and the platform forward, forming an evolving set of tools and best practices.
Facebook’s Q4 in 2016 makes it clear that Facebook isn’t done growing and that mobile is a major part of that growth. 2017 is going to be all about where Facebook goes from here, and there’s a better than good chance that much of Facebook’s future development is going to come from mobile and video (in its many Facebook forms).